CEPR’s new project in the Irkutsk region

Centre for Economic and Political Reforms (CEPR) participates in a new project in the Irkutsk region. This project is aimed at development and implementation of an alternative socioeconomic model.

One of the main elements of this model is strategic state planning. The Irkutsk regional government is working on the five-year plan of socioeconomic development of the region for 2019-2023. This detailed plan contains targeted indicators and road maps. It’s important to stress that the approach is different both from mainstream Russian regulation practice and Soviet centrally planned economy. The Irkutsk model does not presume that the economy will be fully controlled by regional government. It combines advantages of market competition and state regulation.

The state regulation concentrates on support of the secondary sector of the economy. Traditionally Russian economy is based on the extraction and export of natural resources in the primary sector. The new model is aimed at changing this situation and creating a strong industrial sector. For example there is a target to create chemical industry in the oil sector.

The implementation of the model also involves reforms in social policy. The main goal is to increase level and quality of life. The rise of well-being leads to the rise of purchasing power that means economic growth. Social policy does not mean simply providing welfare benefits but includes complex measures such as changing the remuneration system, creating new jobs, providing special educational contracts with employment guarantees, etc.

The mail goal of this model is to promote economic growth through government support of industrial sector. Resulting in accelerated development, it will lead to budget increase, increase in earnings, rise in people’s well-being.

The implementation of the model has already resulted in significant improvement in the Irkutsk region. For example, in 2016-2017 growth of GRP (Gross Regional Product) and regional IPI (Industrial Production Index) in the region is five times higher than national average GRP and IPI. There is also prominent increase in regional fiscal revenues. It demonstrates the effectiveness of the chosen model.